There is a lot going on that could potentially kill the rally in the USD.
This article is originally referred from Orbex News.
Following up from last week’s technical trading idea, we continue focus on the U.S. dollar index.
The world’s reserve currency has been in a strong up trend for a long time although price action indicates signs of weakness in the near term.
The greenback bounced stronger last week as the currency managed to reclaim the 94.33 handle.
However, going forward, we expect to see the USD Index easing back the gains.
There are signs of a potential correction in the index. This could lead to a possible decline or a correction in the dollar.
The support at 90.87 – 90.60 remains a key level of support.
We expect the USD to eventually test this level in the near term.
On the fundamental aspects, there is a lot going on that could potentially kill the rally in the USD.
For one, the ongoing trade wars against China could become a potential disruption to the rally as the U.S. administration imposes higher tariffs.
Meanwhile, focus will turn to the third quarter data over the next few weeks.
This starts from this week ‘s payrolls report and will eventually build up into the data that will add into the third quarter GDP report.
Although expectations are high that the U.S. economy could average around 4.0% if not more, prospects of fourth quarter GDP could signal a slowdown.
Secondly, a slowdown from China due to the higher tariffs has the potential to drag the global economy lower as well.
Original Source: Orbex News